In determining whether a case should be dismissed based on the equitable doctrine of laches, Delaware courts will not use the statute of limitations to define unreasonable delay if unusual conditions or extraordinary circumstances are present

Document: Levey v. Brownstone Asset Management LP, No. 551, 2012 (Del. August 27, 2013)

The Delaware Supreme Court reversed the Court of Chancery, finding that, in the interest of justice, the doctrine of laches by analogy to the statute of limitations should not be applied. After voluntarily leaving Brownstone and two related entities, Levey was sued in federal court by his former partners. Levey counterclaimed for a return of capital and a cash payment. The matter went to arbitration, but the arbitrator disclaimed jurisdiction in June 2008. Levey did not file suit in the Court of Chancery until August 2010. Because of this delay, the Chancery Court dismissed the suit, determining that Levey knew he had a claim by January 2007, and that his delay was unreasonable by analogy to the three-year statute of limitations for contract claims. The Supreme Court reversed, finding that Levey’s delay was not unreasonable because he satisfied four of the five factors set out in IAC InterActiveCorp. v. O’Brien (Del. 2011) that signify the presence of unusual conditions or extraordinary circumstances. These factors included Levey’s timely pursuit of his claim through litigation and arbitration, the fact that the defendants had participated in the prior proceedings, and the existence of a bona fide dispute.